Bank Statement Loans
Qualify for a mortgage using your bank statements instead of tax returns. Ideal for self-employed borrowers who want a simplified way to show income.
See if this mortgage is right for youProgram-at-a-Glance
- Primary residences
- Second homes
- Investment properties
A bank statement loan is designed for self-employed people and business owners who want to qualify for a mortgage using their actual cash flow—not just what shows up on their tax returns. If you have strong deposits but lots of write-offs, this program could be a fit. Here's what you need to know:
What is a Bank Statement Loan?
A bank statement loan lets you qualify for a mortgage using 12 or 24 months of your bank statements instead of tax returns. Lenders average your eligible deposits to figure out your qualifying income. This is especially helpful if your tax returns don't reflect your true earnings due to business deductions.
Why Traditional Lenders Struggle with Self-Employed Borrowers
- Tax deductions reduce reported income - Your legitimate business expenses lower your net income on paper
- Inconsistent income patterns - Monthly earnings may vary, even when annual income is strong
- Lack of traditional employment - No W-2 or employer verification available
- Complex business structures - LLCs, S-Corps, and partnerships confuse traditional underwriting
Bank statement loans bypass these issues by using your actual bank deposits to verify your true earning potential.
Who Can Get a Bank Statement Loan?
Bank statement loans are designed for borrowers who have strong cash flow but may not qualify through traditional income documentation methods. This program is ideal for:
- Self-employed individuals and business owners
- Freelancers and independent contractors
- Real estate investors with multiple properties
- Anyone with significant business deductions
- Borrowers with non-traditional income sources
- Someone with significant tax deductions that lower your reported income
- An investor buying or refinancing rental properties
Example Use Cases and Scenarios
Freelance Consultant
A marketing consultant with $120k annual income but only $45k reported net income due to business deductions. Qualified using $10k average monthly deposits.
Small Business Owner
Restaurant owner with strong cash flow but significant equipment and operating expenses. Used 24 months of business bank statements to qualify.
Real Estate Investor
Property investor with multiple rental properties and irregular income patterns. Qualified using personal bank statements showing consistent deposits.
Gig Economy Worker
Uber driver and delivery worker with multiple income streams. Used combined bank statements from all income sources to qualify.
| Scenario | Description |
|---|---|
| Freelance Consultant | A marketing consultant with $120k annual income but only $45k reported net income due to business deductions. Qualified using $10k average monthly deposits. |
| Small Business Owner | Restaurant owner with strong cash flow but significant equipment and operating expenses. Used 24 months of business bank statements to qualify. |
| Real Estate Investor | Property investor with multiple rental properties and irregular income patterns. Qualified using personal bank statements showing consistent deposits. |
| Gig Economy Worker | Uber driver and delivery worker with multiple income streams. Used combined bank statements from all income sources to qualify. |
How Do Bank Statement Loans Work?
Instead of reviewing your tax returns, lenders look at 12 or 24 months of your personal or business bank statements. They average your eligible deposits to calculate your qualifying income. You can use whichever account and time frame gives you the best result.
What Documents Will You Need?
- 12–24 months of bank statements (personal or business)
- Proof of business ownership (like a business license or articles of incorporation)
- Credit report and score (minimum 660)
- Property details (purchase agreement or appraisal)
You won't need tax returns, W-2s, pay stubs, or employment verification.
What Are the Main Requirements?
- Minimum credit score: 660
- No mortgage lates in the past 12 months
- No bankruptcy, foreclosure, or deed-in-lieu in the last 4 years
- At least 2 years in business
- Consistent, verifiable deposits
- Down payment: 10% or more
- Loan amounts up to $3,000,000
- 6 months of reserves (typically)
- Gift funds allowed for primary residences
Which Properties Are Eligible?
- Primary residences (1–4 units)
- Second homes (1 unit)
- Investment properties (1–4 units)
- Condos (including non-warrantable)
- Co-ops are not eligible
Real-World Example: Bank Statement Loans
This video is AI generated and does not represent an actual customer.
The Consultant's Journey to Homeownership
A successful freelance marketing consultant had been dreaming of buying her first home for years. With a strong client base and consistent monthly income averaging $8,500, she felt confident about her financial situation. She had saved $45,000 for a down payment and found her perfect home—a charming 3-bedroom house listed at $450,000.
When she applied for a conventional mortgage through her local bank, everything seemed promising initially. Her credit score was excellent at 720, and she had no debt beyond a small car payment. However, the approval process hit a major roadblock when the lender reviewed her tax returns.
Despite earning over $100,000 annually, her tax returns showed only $42,000 in reported net income due to legitimate business deductions, including home office expenses, professional development costs, and business equipment. The conventional lender could only qualify her for a $168,000 loan based on her reported income—far short of what she needed.
Frustrated but determined, she began researching alternative financing options and discovered that another lender offered bank statement loans. This program would use her actual bank deposits to verify income instead of relying on tax returns. By averaging her monthly deposits over the past 12 months, the alternative lender was able to qualify her for a $360,000 loan with a 10% down payment.
The process was straightforward: she provided 12 months of bank statements, proof of her business registration, and standard mortgage documentation. Within three weeks, she received approval and was able to purchase her dream home. The slightly higher interest rate (0.75% above conventional rates) was a small price to pay for achieving her homeownership goals.
This story illustrates how bank statement loans can bridge the gap between actual cash flow and reported income, making homeownership accessible to self-employed professionals who might otherwise be locked out of the market.
Benefits & Considerations
Benefits:
- No tax returns required
- Qualify based on your actual cash flow
- Flexible options for 12 or 24 months of statements
- Large loan amounts available
- Can be used for primary, second homes, or investment properties
Things to Consider:
- Interest rates are typically higher than conventional loans
- Minimum down payment is 10%
- You'll need a 660 credit score or higher
- Must be in business for at least 2 years
- Not all lenders offer this program
Bank Statement Loans vs. Conventional Loans
Compare key features and requirements at a glance
| Feature | Bank Statement Loans | Conventional Loan |
|---|---|---|
| Who Qualifies | Self-employed, business owners, gig workers | W-2 employees, salaried workers |
| Income Documentation | 12–24 months of bank statements | Traditional income documentation |
| Minimum Credit Score | 660 | 620 |
| Minimum Down Payment | 10% | 3% |
| Private Mortgage Insurance | Private mortgage insurance (PMI) | Required with LTV > 80% |
| Occupancy Type | Primary, Second, Investment | Primary, Second, Investment |
| Property Type | Single-Family Residences, 2-4 Unit Homes, Condos | Single-Family Residences, 2-4 Unit Homes, Condos |
| Loan Limits | $3,000,000 | Varies by County |
| Interest Rates | Typically 0.5-1% higher than conventional | Market rates |
| Processing Time | 45-60 days | Varies by lender |
| Closing Costs | 3-6% of loan amount | Varies by state and lender |
| Prepayment Penalty | None | None |
| Reserves Required | 6 months of PITI | Yes |
| Debt-to-Income Ratio | Up to 45% | Up to 50% |
| Maximum Loan Amount | $3,000,000 | Conforming loan limits by county |
| Appraisal Requirements | Standard appraisal required | Standard appraisal required |
| Occupancy Requirements | Primary residence for 12 months | Primary residence for 12 months |
| Non-Warrantable Condos | Eligible | Limited availability |
| Manufactured Homes | Eligible with permanent foundation | Must be on permanent foundation |
| ADU Properties | Eligible | Not typically eligible |
| Barndominiums | Eligible | Not typically eligible |
| Tiny Homes | Eligible | Not typically eligible |
| Mixed-Use Properties | Eligible | Limited availability |
| Rural Properties | Eligible | Eligible |
| Feature | Bank Statement Loans | Conventional Loan |
|---|---|---|
| Who Qualifies | Self-employed, business owners, gig workers | W-2 employees, salaried workers |
| Income Documentation | 12–24 months of bank statements | Traditional income documentation |
| Minimum Credit Score | 660 | 620 |
| Minimum Down Payment | 10% | 3% |
| Private Mortgage Insurance | Private mortgage insurance (PMI) | Required with LTV > 80% |
| Occupancy Type | Primary, Second, Investment | Primary, Second, Investment |
| Property Type | Single-Family Residences, 2-4 Unit Homes, Condos | Single-Family Residences, 2-4 Unit Homes, Condos |
| Loan Limits | $3,000,000 | Varies by County |
| Interest Rates | Typically 0.5-1% higher than conventional | Market rates |
| Processing Time | 45-60 days | Varies by lender |
| Closing Costs | 3-6% of loan amount | Varies by state and lender |
| Prepayment Penalty | None | None |
| Reserves Required | 6 months of PITI | Yes |
| Debt-to-Income Ratio | Up to 45% | Up to 50% |
| Maximum Loan Amount | $3,000,000 | Conforming loan limits by county |
| Appraisal Requirements | Standard appraisal required | Standard appraisal required |
| Occupancy Requirements | Primary residence for 12 months | Primary residence for 12 months |
| Non-Warrantable Condos | Eligible | Limited availability |
| Manufactured Homes | Eligible with permanent foundation | Must be on permanent foundation |
| ADU Properties | Eligible | Not typically eligible |
| Barndominiums | Eligible | Not typically eligible |
| Tiny Homes | Eligible | Not typically eligible |
| Mixed-Use Properties | Eligible | Limited availability |
| Rural Properties | Eligible | Eligible |
About the Author
Frequently Asked Questions About Bank Statement Loans
Get answers to the most common questions about this loan program
A bank statement loan is a mortgage program that uses your bank deposits to verify income instead of tax returns. This is ideal for self-employed borrowers who have strong cash flow but significant business deductions that reduce their reported net income.
Instead of reviewing tax returns, lenders analyze 12-24 months of your bank statements to calculate your qualifying income. They average your monthly deposits to determine how much you can borrow, typically using 12 months of statements for the most favorable calculation.
Self-employed individuals, business owners, freelancers, consultants, and anyone with non-traditional income sources can qualify. You need at least 2 years in business, a minimum credit score of 660, and consistent bank deposits.
You'll need 12-24 months of consecutive bank statements (personal or business), proof of business ownership, and standard mortgage documents like credit reports and property information. No tax returns are required.
Pros: No tax returns needed, higher qualifying income potential, flexible for self-employed borrowers. Cons: Higher interest rates than conventional loans, larger down payment requirements (10% minimum), and stricter credit requirements.
Loan amounts can go up to $3,000,000 depending on your bank deposits, credit score, and down payment. The exact amount is calculated based on your average monthly deposits and other qualifying factors.
Yes! If you were denied a conventional mortgage due to self-employment, bank statement loans are specifically designed for your situation. They use your actual bank deposits instead of tax returns to verify income, making homeownership possible for self-employed borrowers with strong cash flow.
Bank statement loans allow you to qualify for a mortgage without tax returns by using your bank deposits instead. You'll need 12-24 months of bank statements, proof of business ownership, and a minimum credit score of 660. This is ideal for self-employed borrowers with significant business deductions.
Bank statement loans are perfect for this situation. Instead of relying on tax returns that may show low net income due to legitimate business deductions, lenders use your actual bank deposits to calculate your qualifying income. This often results in much higher loan amounts.
Yes! Bank statement loans are designed for borrowers with variable income. Lenders average your deposits over 12-24 months, so even if your income varies month-to-month, you can still qualify based on your average monthly deposits.
Related Loan Programs
Explore other loan programs that might be right for you
Foreign National Loans
Specialized financing for foreign nationals purchasing US property. Perfect for international investors, expatriates, and foreign buyers wanting to invest in US real estate.
Low Credit Score Mortgages
Get approved for a mortgage even with a credit score below 680. Specialized programs for borrowers with credit challenges who are ready for homeownership.
No Credit History Loans
Get approved for a mortgage even without a traditional credit history. Specialized programs for borrowers who are new to credit or have limited credit history.
